‘British bid' to gatecrash Telegraph takeover is rejected
An 11th-hour attempt to gatecrash the sale of The Telegraph with a 'British bid' has been formally rejected.
Dovid Efune, the publisher of The New York Sun, has been notified that his latest approach, which includes funding from the hedge fund manager Jeremy Hosking, has been rejected by IMI.
It valued the Telegraph at £550m but had only £170m of committed equity and required a level of borrowing that lenders would be unlikely to support, sources said. Mr Efune has said he expects to reveal more backers soon.
He has been pursuing control of The Telegraph for a year. He emerged from an auction in October as the preferred bidder but subsequently struggled to raise finance.
In a development that creates more potential obstacles for Mr Efune, the firm appointed by IMI to run the auction, Robey Warshaw, has stopped work on it. Sources said the investment bankers expect the rival bid by RedBird Capital to proceed.
The US private equity firm has reached an agreement in principle to acquire majority ownership of The Telegraph from IMI, the United Arab Emirates state media company. The deal values the company at £500m.
Together, as the joint venture RedBird IMI, the pair were blocked from taking full control last year following an outcry over press freedom. It would have handed the UAE a 75pc stake.
Mr Efune said he is undeterred by the latest action.
He told The Telegraph: 'Our British bid is strong with upward momentum.
'We expect to announce new funding partners in the near future. We're more confident than ever that what we have to offer is a favourable pathway for the sellers, The Telegraph and journalism writ large.'
The British-born entrepreneur acquired The New York Sun in 2021 after running The Algemeiner, a newspaper for the Hasidic Jewish community.
He is casting his bid for The Telegraph alongside Mr Hosking and Nadhim Zahawi, the former Conservative cabinet minister, as the 'British bid' in contrast to RedBird's American roots.
However, Gerry Cardinale, RedBird's founder, is in talks with at least three potential British minority co-investors, including Lord Rothermere, the owner of the Daily Mail.
Following proposed changes to the law banning foreign state ownership of newspapers, IMI is expected to retain a passive stake in The Telegraph of up to 15pc.
Mr Efune's chances of disrupting the transaction have appeared to be fading. This week on his X account, he appeared to seek divine intervention by posting 'stand still and see the salvation of the Lord', a quote from Exodus typically interpreted as an appeal to trust in God.
The bid's remaining earthly hopes may rest on Mr Efune's efforts to stoke political opposition to RedBird and to Labour's proposed legal changes.
His consortium appears further to the Right and more ideological than RedBird's, and has been seeking to exploit a Conservative split over the laws on foreign state ownership of newspapers.
Tory leaders have said they will not oppose a 15pc limit but some of the party's peers intend to support a Liberal Democrat 'fatal motion' in the House of Lords.
It is unclear how such opposition would deliver The Telegraph to Mr Efune's 'British bid'.
Mr Cardinale has told senior managers at the newspaper that he is anxious to complete his takeover as soon as possible to end two years of ownership uncertainty and launch an ambitious growth and investment strategy.
Once a deal emerges, a smooth regulatory process could mean The Telegraph is under RedBird's control by September.
It would join a portfolio of media and sport assets that includes AC Milan, a significant stake in Liverpool FC and a film studio co-founded with Ben Affleck and Matt Damon.
RedBird is also backing the planned $12bn (£8.9bn) takeover of the Hollywood giant Paramount, the owner of CBS in the United States and Channel 5 in Britain.
If the Culture Secretary Lisa Nandy refers The Telegraph deal to the Competition and Markets Authority for a full investigation of competition and plurality concerns, the timeline would be extended by several months.
She could also impose legal restrictions on Mr Cardinale's ability to work with Telegraph management in the meantime.
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